The shareholders’ meeting of Juyang Industrial, a major garment manufacturer, successfully passed various resolutions on June 18, 2019. Chairman Zhou Liping said that capital expenditures this year will still be in Vietnam and Indonesia, but Indonesia will strengthen its presence in 2020, with the goal of increasing production capacity by 15%, and it will become the largest producer in the future.
Zhou Liping said that the textile market will be affected by the US-China trade war. If the negotiations between the two sides break down, the impact will continue to ferment. Even if the two sides continue to negotiate, it will be time-consuming. The trade war has had a good impact on the garment industry, which is affected by consumption power.
For the garment industry, the response to the trade war is to increase its customer base. Some customers have poor growth or poor sales, and the legal person believes that it will affect Juyang; however, Juyang believes that although the sales of these customers are poor, cooperation is expanding and cooperation will be more diversified in the future, so we should keep watching.
As for Juyang’s future plans to expand factories and increase production capacity, Chairman Zhou pointed out that this year’s capital expenditures began planning as early as 2018, and this year’s capital expenditures are still in the north and south Vietnam and Indonesia. In the short term, Vietnam will be the region with the highest production capacity in Juyang, accounting for 37% of all production capacity in Juyang, Indonesia accounting for 33%, Cambodia 20%, and the rest are Africa and China.
But Juyang will strengthen investment and expansion in Indonesia and even Africa in the next 3-5 years. Zhou Liping said that Vietnam’s production capacity will grow, but the growth will slow down. The annual growth of Juyang’s total production capacity will be 10%, Vietnam will remain at 5%, and Indonesia will grow by 15%. In the future, Indonesia will be the largest production capacity region.
He analyzed that currently all walks of life want to invest in Vietnam. Many industries have been deployed in Vietnam a long time ago and will be more enthusiastic now, especially those who are migrating quickly from China. . Due to its geographical location and generally excellent labor standards, Vietnam has always been the first choice for investment in various industries. In addition, the Vietnamese government has signed preferential policies with other countries, which is conducive to the entry of foreign investment.
Zhou Liping said that from the perspective of the textile and garment industry, which employs a large number of workers, Vietnam seems to be overheated and should be disadvantageous. It is foreseeable that there will be labor shortages and labor shortages in the future. Phenomenon, when demand exceeds supply, the quality of employees will decline, and the investment environment will change. Land prices, factories, logistics, labor wages, and prices are all rising. It is estimated that the growth rate and scale will slow down in the future. It is better to consider increasing the layout in Indonesia or Cambodia. .
Zhou Liping emphasized that Indonesia has a population of 240 million, abundant labor force, and wage levels are not as high as those in Vietnam. The only disadvantage is that it takes longer to ship garments to the United States than from before. Shipping time in Vietnam used to take an average of 10 days longer. If we are talking about fashionable clothing, garment factories need to quickly respond to customer needs, and 10 days is also a very important factor.
Zhou Liping said that fortunately, Indonesia’s localized supply chain can gradually support local garment production, and this problem can be gradually solved. Juyang has new investment plans in Indonesia next year. Make every effort to move towards the goal of increasing production capacity by 15%.
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